diff --git a/qa/rpc-tests/bip68-sequence.py b/qa/rpc-tests/bip68-sequence.py
index 33e05dfc5..ce9afddba 100755
--- a/qa/rpc-tests/bip68-sequence.py
+++ b/qa/rpc-tests/bip68-sequence.py
@@ -15,8 +15,8 @@ from test_framework.blocktools import *
 
 SEQUENCE_LOCKTIME_DISABLE_FLAG = (1<<31)
 SEQUENCE_LOCKTIME_TYPE_FLAG = (1<<22) # this means use time (0 means height)
-SEQUENCE_LOCKTIME_GRANULARITY = 9 # this is a bit-shift
-SEQUENCE_LOCKTIME_MASK = 0x0000ffff
+SEQUENCE_LOCKTIME_GRANULARITY = 7 # this is a bit-shift
+SEQUENCE_LOCKTIME_MASK = 0x0003ffff
 
 # RPC error for non-BIP68 final transactions
 NOT_FINAL_ERROR = "64: non-BIP68-final"
diff --git a/src/primitives/transaction.h b/src/primitives/transaction.h
index f87b45e72..806d912f4 100644
--- a/src/primitives/transaction.h
+++ b/src/primitives/transaction.h
@@ -73,22 +73,32 @@ public:
     static const uint32_t SEQUENCE_LOCKTIME_DISABLE_FLAG = (1 << 31);
 
     /* If CTxIn::nSequence encodes a relative lock-time and this flag
-     * is set, the relative lock-time has units of 512 seconds,
+     * is set, the relative lock-time has units of 128 seconds,
      * otherwise it specifies blocks with a granularity of 1. */
     static const uint32_t SEQUENCE_LOCKTIME_TYPE_FLAG = (1 << 22);
 
     /* If CTxIn::nSequence encodes a relative lock-time, this mask is
      * applied to extract that lock-time from the sequence field. */
-    static const uint32_t SEQUENCE_LOCKTIME_MASK = 0x0000ffff;
+    static const uint32_t LEGACY_SEQUENCE_LOCKTIME_MASK = 0x0000ffff;
+    static const uint32_t DIP0001_SEQUENCE_LOCKTIME_MASK = 0x0003ffff;
+    static const uint32_t GetSequenceLocktimeMask(bool fDIP0001Active /*= false */)
+    {
+        return fDIP0001Active ? DIP0001_SEQUENCE_LOCKTIME_MASK : LEGACY_SEQUENCE_LOCKTIME_MASK;
+    }
 
     /* In order to use the same number of bits to encode roughly the
      * same wall-clock duration, and because blocks are naturally
-     * limited to occur every 600s on average, the minimum granularity
-     * for time-based relative lock-time is fixed at 512 seconds.
+     * limited to occur every 150s on average, the minimum granularity
+     * for time-based relative lock-time is fixed at 128 seconds.
      * Converting from CTxIn::nSequence to seconds is performed by
-     * multiplying by 512 = 2^9, or equivalently shifting up by
-     * 9 bits. */
-    static const int SEQUENCE_LOCKTIME_GRANULARITY = 9;
+     * multiplying by 128 = 2^7, or equivalently shifting up by
+     * 7 bits. */
+    static const int LEGACY_SEQUENCE_LOCKTIME_GRANULARITY = 9;
+    static const int DIP0001_SEQUENCE_LOCKTIME_GRANULARITY = 7;
+    static const int GetSequenceLocktimeGranularity(bool fDIP0001Active /*= false */)
+    {
+        return fDIP0001Active ? DIP0001_SEQUENCE_LOCKTIME_GRANULARITY : LEGACY_SEQUENCE_LOCKTIME_GRANULARITY;
+    }
 
     CTxIn()
     {
diff --git a/src/script/interpreter.cpp b/src/script/interpreter.cpp
index 149a4f015..994f56540 100644
--- a/src/script/interpreter.cpp
+++ b/src/script/interpreter.cpp
@@ -1213,7 +1213,7 @@ bool TransactionSignatureChecker::CheckSequence(const CScriptNum& nSequence) con
 
     // Mask off any bits that do not have consensus-enforced meaning
     // before doing the integer comparisons
-    const uint32_t nLockTimeMask = CTxIn::SEQUENCE_LOCKTIME_TYPE_FLAG | CTxIn::SEQUENCE_LOCKTIME_MASK;
+    const uint32_t nLockTimeMask = CTxIn::SEQUENCE_LOCKTIME_TYPE_FLAG | CTxIn::LEGACY_SEQUENCE_LOCKTIME_MASK;
     const int64_t txToSequenceMasked = txToSequence & nLockTimeMask;
     const CScriptNum nSequenceMasked = nSequence & nLockTimeMask;
 
diff --git a/src/test/miner_tests.cpp b/src/test/miner_tests.cpp
index 5bbbafa07..d9db299b6 100644
--- a/src/test/miner_tests.cpp
+++ b/src/test/miner_tests.cpp
@@ -311,7 +311,7 @@ BOOST_AUTO_TEST_CASE(CreateNewBlock_validity)
 
     // relative time locked
     tx.vin[0].prevout.hash = txFirst[1]->GetHash();
-    tx.vin[0].nSequence = CTxIn::SEQUENCE_LOCKTIME_TYPE_FLAG | (((chainActive.Tip()->GetMedianTimePast()+1-chainActive[1]->GetMedianTimePast()) >> CTxIn::SEQUENCE_LOCKTIME_GRANULARITY) + 1); // txFirst[1] is the 3rd block
+    tx.vin[0].nSequence = CTxIn::SEQUENCE_LOCKTIME_TYPE_FLAG | (((chainActive.Tip()->GetMedianTimePast()+1-chainActive[1]->GetMedianTimePast()) >> CTxIn::GetSequenceLocktimeGranularity(fDIP0001ActiveAtTip)) + 1); // txFirst[1] is the 3rd block
     prevheights[0] = baseheight + 2;
     hash = tx.GetHash();
     mempool.addUnchecked(hash, entry.Time(GetTime()).FromTx(tx));
@@ -319,10 +319,10 @@ BOOST_AUTO_TEST_CASE(CreateNewBlock_validity)
     BOOST_CHECK(!TestSequenceLocks(tx, flags)); // Sequence locks fail
 
     for (int i = 0; i < CBlockIndex::nMedianTimeSpan; i++)
-        chainActive.Tip()->GetAncestor(chainActive.Tip()->nHeight - i)->nTime += 512; //Trick the MedianTimePast
-    BOOST_CHECK(SequenceLocks(tx, flags, &prevheights, CreateBlockIndex(chainActive.Tip()->nHeight + 1))); // Sequence locks pass 512 seconds later
+        chainActive.Tip()->GetAncestor(chainActive.Tip()->nHeight - i)->nTime += fDIP0001ActiveAtTip ? 128 : 512; //Trick the MedianTimePast
+    BOOST_CHECK(SequenceLocks(tx, flags, &prevheights, CreateBlockIndex(chainActive.Tip()->nHeight + 1))); // Sequence locks pass 128/512 seconds later
     for (int i = 0; i < CBlockIndex::nMedianTimeSpan; i++)
-        chainActive.Tip()->GetAncestor(chainActive.Tip()->nHeight - i)->nTime -= 512; //undo tricked MTP
+        chainActive.Tip()->GetAncestor(chainActive.Tip()->nHeight - i)->nTime -= fDIP0001ActiveAtTip ? 128 : 512; //undo tricked MTP
 
     // absolute height locked
     tx.vin[0].prevout.hash = txFirst[2]->GetHash();
@@ -368,9 +368,9 @@ BOOST_AUTO_TEST_CASE(CreateNewBlock_validity)
     // For now these will still generate a valid template until BIP68 soft fork
     BOOST_CHECK_EQUAL(pblocktemplate->block.vtx.size(), 3);
     delete pblocktemplate;
-    // However if we advance height by 1 and time by 512, all of them should be mined
+    // However if we advance height by 1 and time by 128/512, all of them should be mined
     for (int i = 0; i < CBlockIndex::nMedianTimeSpan; i++)
-        chainActive.Tip()->GetAncestor(chainActive.Tip()->nHeight - i)->nTime += 512; //Trick the MedianTimePast
+        chainActive.Tip()->GetAncestor(chainActive.Tip()->nHeight - i)->nTime += fDIP0001ActiveAtTip ? 128 : 512; //Trick the MedianTimePast
     chainActive.Tip()->nHeight++;
     SetMockTime(chainActive.Tip()->GetMedianTimePast() + 1);
 
diff --git a/src/validation.cpp b/src/validation.cpp
index faceb909c..feb723c91 100644
--- a/src/validation.cpp
+++ b/src/validation.cpp
@@ -301,9 +301,9 @@ static std::pair<int, int64_t> CalculateSequenceLocks(const CTransaction &tx, in
             // smallest allowed timestamp of the block containing the
             // txout being spent, which is the median time past of the
             // block prior.
-            nMinTime = std::max(nMinTime, nCoinTime + (int64_t)((txin.nSequence & CTxIn::SEQUENCE_LOCKTIME_MASK) << CTxIn::SEQUENCE_LOCKTIME_GRANULARITY) - 1);
+            nMinTime = std::max(nMinTime, nCoinTime + (int64_t)((txin.nSequence & CTxIn::GetSequenceLocktimeMask(fDIP0001ActiveAtTip)) << CTxIn::GetSequenceLocktimeGranularity(fDIP0001ActiveAtTip)) - 1);
         } else {
-            nMinHeight = std::max(nMinHeight, nCoinHeight + (int)(txin.nSequence & CTxIn::SEQUENCE_LOCKTIME_MASK) - 1);
+            nMinHeight = std::max(nMinHeight, nCoinHeight + (int)(txin.nSequence & CTxIn::GetSequenceLocktimeMask(fDIP0001ActiveAtTip)) - 1);
         }
     }